The safe-haven dollar was hurt after Beijing injected new cash into the financial system on Thursday, when Evergrande announced it would make interest payments on an onshore bond.
However, some holders of its offshore bonds said they had not received coupon payments by a Thursday deadline. More dollar bond interest is due next week.
The dollar gained 0.16% to 110.57 yen for the first time since Aug. 11 as benchmark U.S. Treasury yields climbed as high as 1.452% in Tokyo, a level not seen since July 2. Yields last traded at 1.4320%.
Hawkish comments from the Bank of England (BOE) on Thursday pushed up yields globally, a day after the U.S. Federal Reserve said it could start reducing its monthly bond purchases by as soon as November, and that interest rates could rise quicker than expected by next year.
The BOE said two of its policymakers had voted for an early end to pandemic-era government bond-buying and markets brought forward their expectations for an interest rate rise to March.
"Evergrande's fate remains uncertain, but markets are now less concerned about any potential systemic impact, leaving room for risk assets to rally," said ING's Francesco Pesole and Chris Turner in a morning note to clients.
"Improved sentiment has weighed on the dollar, which is also discounting markets' reluctance to align with the Fed's Dot Plot."
Sterling was little changed at $1.3717 after rising as far as $1.3750 overnight for the first time since Sept. 20.
The euro was also mostly flat at $1.1738, after recovering from a more than one-month low of $1.16835 reached on Thursday.
The risk-sensitive Australian dollar was 0.2% lower at $0.7280 after touching a one-week high of $0.73165.
Westpac sees the dollar index flat to slightly higher into the end of the year, but keeping to a 92.0-93.5 range in the near term.
"The Fed's clear taper signal and inching forward of rate lift-off plans, not to mention ongoing uncertainty around Evergrande, should contain the downside," Westpac strategists wrote in a report.
Meanwhile, National Australia Bank said a sharp decline in dollar sentiment would be needed to hit its year-end target of 89.6 for the dollar index, "and there are no obvious short-term triggers" for that, strategists wrote in a research note.
Several Fed officials are due to speak on Friday, including Chair Jerome Powell, who gives opening remarks at a Fed Listens event.
(Reporting by Ritvik Carvalho; additional reporting by Kevin Buckland in Tokyo, Editing by Timothy Heritage) ((Ritvik.Carvalho@thomsonreuters.com; +44 2075429406; Reuters Messaging: firstname.lastname@example.org; Twitter @ritvikcarvalho))